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Corn Rises as Traders Take Positions Ahead of USDA Reports

06/29/2020 | 03:31pm

By Kirk Maltais

 

--Corn for December delivery rose 2.9% to $3.34 3/4 a bushel on the Chicago Board of Trade Monday, with grains traders stepping up short covering ahead of Tuesday's reports from the USDA.

--Wheat for September delivery rose 2.3% to $4.86 1/2 a bushel.

--Soybeans for November delivery rose 0.1% to $4.86 1/2 a bushel.

 

HIGHLIGHTS

 

Cover Up Those Shorts: Grains traders stepped up short-covering ahead of Tuesday's grain storage and planted acreage reports from the USDA, said Josh Graves of RJO Futures. "Today traders are adjusting their positions ahead of the report and there have been heavy short positions in July for some time now," said Mr. Graves. The CFTC's most recent commitment of traders report, issued following the close Friday, showed net shorts building for grains among managed money funds - with the fund net short in corn by nearly 286,000 contracts as of June 23, according to the CFTC. Funds are also net short by over 45,000 contract in soft red winter wheat, and short roughly 37,500 contracts of soft red winter wheat.

Turning Up the Heat: After getting some rain at the tail end of last week, grains traders are expecting an extended period of hot and dry conditions to possibly tighten high grain supplies forecast for this year, said Terry Reilly of Futures International. Temperatures are expected to stay level around 90 degrees or above for a week or two, which may do a lot to push prices higher amid the quarterly stock report and acreage report due from the USDA tomorrow at noon ET.

 

INSIGHTS

 

Where's China?: The USDA's weekly grain export inspections report showed only 342,512 metric tons of soybeans inspected for export this week - less than half of inspections at this time last year. Additionally, China isn't among the top destinations of U.S. soybeans, with the top receivers being Egypt, Mexico, and Japan. Soybean futures finished trading Monday relatively unchanged, amidst tension between the U.S. and China as well as some resurgence in Covid-19 cases in China. "China reported 17 new cases of coronavirus cases on Sunday, with 14 being in Beijing and the other three being people who entered the country from elsewhere,"" said Arlan Suderman of StoneX. "Coronavirus fears are common in the United States, but the fear level is much higher in China."

Unintended Consequences: Advancing farmland over native forest helped Brazil become a leading food producer, but it also may reduce corn yields by a median of 6%-8% each year, a Dartmouth study says. One of the researchers, Stephanie Spera, told WSJ that forest clearing added as many as eight warmer-than-average nights during the corn growing season, reducing yields by as much as 400 kg/ha, according to her models. "Even in our most conservative scenario, we still saw significant increases in temperature and decreases in corn yields," she said. The changes don't affect soy, the country's largest grain export.

 

AHEAD:

 

--The USDA releases its annual planted acreage estimates at noon ET Tuesday.

--The USDA releases its quarterly grain stockpile estimates at noon ET Tuesday.

--The USDA releases its monthly agricultural prices report at 3 p.m. ET Tuesday.

--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.

--The USDA releases its monthly grain crushings report at 3 p.m. ET Wednesday.

 

Paulo Trevisani contributed to this article.

 

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